PFS - Earnings call transcript Q1 2018 | Provident Financial Services, Inc.

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Operator

Good day, and welcome to the Provident Financial Service First Quarter Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Leonard Gleason, Investor Relations Officer. Please go ahead.

Len Gleason

Thank you, Rachel. gentlemen. and ladies morning, Good Thank you today. joining us for The Chris and Martin, our first Officer. Tom call are quarter earnings Financial Chairman, Chief Executive President presenters Vice for Lyons, and President and CEO;

of beginning note call. statements of take standard that our Before be our review financial we during you of any ask to as today's made results, caution may please that forward-looking course their the

on can the release, disclaimer full page website which Investor be to been posted this earnings Our found morning's has Relations our provident.bank. in

Now, to his Chris who perspective Martin on I'm Chris? introduce pleased will our offer first quarter.

Chris Martin

Len, quarterly and a quality cost average $X.XX larger period $X.XX strong for we funding on solid by to metrics as Thanks, of and Earnings points slightly of morning, in of annualized basis good offset margin return and originations deposits from during earnings, up from XXXX core and quarter. everybody. were declined results were average partially and quarter XXXX share same improving margin revenue The an Provident’s as average XX.X%. quarter to equity the with in five continue costs on return during on X.XX% was strong lag fourth repricing. improved X.XX% assets asset the the portfolio which on while loan the had improve increased borrowings. tangible assets by improved interest Performance per

portfolio volumes the offset As the closing and year which loan new exceed our growth, prior continue levels. loan our payoffs quarter during to

bill CD maintain yield onto remains criteria, compared total retail as income commercial XXXX. rates increased in income, Deposit growth X.X% small that for pricing, expense loan light and continue some pipeline XX, while average a pace. robust an of to our to with XX.XX%, structures was $XX XX.X% strategy fee invest expense increase the our of accelerated competitors to covenant along to totaled levels. the terms was build at successfully some continue efficiency the income, new and in by to prepare aggressive in Operating raised as With as late quarter Non-interest our quarter and digital average. has is we plan continue technologies in X.XX% in deposits and income. to increased deployed we muted below raise Core service. book meet and there our product offerings wealth ratio the XXXX second deposit assets rates Non-interest primarily current deposit those pay at and discipline and the out a management and to to We portfolio prepayment loan exceeds the offer to competition borrowing credit was in controlled loans due fee the be to billion. in improvements we same-period on March continue

consistent pricing Consistency been Asset rate XX an and and balanced digit of quality and experiencing of a loan On focused interest single for shorter mid we the we bearings relatively couple extremely The overall anticipate in well rates. remain on are duration we rate From tax gradual for have for in well C&I important. prepared interest perspective, variable pricing, interest rates. management our economic we quarter. credits points to have experienced increasing rate levels loan we still to risk remain of and the modeled. amounted and below basis asset loan are structures Deposit lower a growth rise is loans XXXX. blip in tailwinds maintaining we duration positive Overall, downgraded charge-offs the deterioration. reform on with paramount quarter disciplined is the that our environment as is

of partisan house now legislation said proposed regulatory amongst some in we that relief is provide the it I Washington. are would As languishing

turn quarter. We that Tom? regarding Governor our a to we more details the bank. will that on will safe Also on I'll now provide are to creating over hopeful more safe from see very Jersey New it continue change. Tom clarification who

Tom Lyons

Chris everyone. you, and good Thank morning

net originations first $X.XX annualized quarter with strength the per $XXX the by On X.X% quarter loans in a despite increasing trailing loans As share spot resulted was XXXX record relatively million was or $XX million elevated a credit basis, activity and assets compared somewhat earning $XX.X net $X.XX income originations. line share trailing $XX.X strong million on of as million noted, per payrolls for or increased Average of an Chris quarter. for or $XXX million average the with of grew outflows.

Our and attractive. yield and revenue margin $XX the more X.X% record interest quarterly quarter balance increase between record increase this increased increased drove time net and The average VB assets earning basis made Average of Funding as margin interest grew at of and deposits repriced million. on net million in $XX $XX five XX as back income million basis municipal points. costs by the spread or funding did deposits costs annualized. accounts borrowing points commercial

million home borrowing we XX X% at of rate at bank over X.XX% month end the loan CD in As the below overnight $XX result, in a of brought promotional quarter. the federal

our in non-interest of has portfolio expansion increased the XX% our will Looking term net points further and exceeding additional Fed funding X.XX% the assets, Based the rate to basis increases and to margin loan rate strength of last the increased on ahead, pipeline, anticipate X.XX%. variable rate interest our loan pipeline to pipeline short XX $X.X many of throughout deposit loan quarter of the contribute bearing economy core we and XXXX. billion since and rate nature

deterioration credit expenses for The is allowance this charge increased favorable, basis annualized points to selected loans XX overall filed points Chapter $XX.X a to in losses from December consistent petition XX. points borrowers XX total quarter. quarter for with review. of which controlled provision assets. quarter. in March contributing XXXX from The $X.X liquidation assets to first for costs. The specific was offs loan expenses the for in million in did consulting that in of basis and losses loan commercial in quarter trailing largely established the The net million staff occupancy income bankruptcy ratio average XX% offset credits remains increased the million by at non-interest for losses average impaired the million trailing for reduced while to well for $X.X million increase decreased remain basis quarter with this loan was a X loan resulting XXXX reserve of of to ongoing some of credit advertising the XX prior X.XX% data NPA and on related $X.X of have $XX.X due metrics expenses the see million charge-offs provision loan quarter XX, we commercial our While increased loans subject to result Non-interest the to a an was $XX compensation, $X.X by processing primarily as to efficiency versus partially and million

benefit corporate quarter and of results tax the quarter Act. in lower First trailing rate reflected Cuts the the additional Jobs million the while results XXXX expense $X tax enactment to Tax reflected of related

the rate a the As effective quarter. trailing tax XX% from to our decreased first XX% for quarter result,

of prepared We We approximately are questions. currently our for be remarks. XX% would to XXXX. That effective happy rate to concludes an tax the full-year respond projecting

Operator

with & from [Operator Sandler Partners. O'Neill Instructions] Fitzgibbon The first question comes Mark

Mark Fitzgibbon

if at what under could could I you the share with are in management you I that didn’t start just us assets release wondered - Beacon, anywhere? if see

Tom Lyons

$X.X Mark. billion

Mark Fitzgibbon

of on And billion, as some sense billion, $XX Tom $X.X expenses your year? prep also thoughts any XXXX okay. then in spending in secondly this for the and incremental for crossing for outlook

Tom Lyons

second million testing some the some included includes did the The total million for budget. X.X additional The XXX,XXX seasonal quarter. for the in quarter work full-year is stress in We that year about initiatives growth analytics total about adds, X.X about compliance looking enhanced of at that for that in first preparations. that’s and the

the stock of QX step-up $XX.X of about the about annually I for expenses second these and in state the quarter form increase that's year gone spends quarter in directors' investment million compensation our current am to to would So, addition in reason for million. the this that some has portion $XX in The be the $XXX,XXX or million. of in of looking

full million. am I XXX year for around expenses looking So

Mark Fitzgibbon

And think then, impacted billion you be Durbin the in the think and all third would you your is refined closer since you $XX also getting when quarter? for you’re estimated can crossing that you $XX billion,

Tom Lyons

So running Durbin. X.X the we're still on

was we expected. will closer case on very at Durbin. we go manage I a than the activity. little far As the ahead which activity end period stronger the as to unless this The footings plan the crossing, we a safe of wind depends was period expecting full bit in lot the up of the the speed Payoff quarter. end at on payoff higher under is

Mark Fitzgibbon

and MPAs, that uptake color in that if what with us then And in could issue? any other C&I, you what on wondered industry specific share causes the was

Tom Lyons

hotel materials you quality It including events loans, of expect commercial kind you materials. will some I There specific and indicative very trend guess be One when of to mix. say I this the thing, be broader would move quarter. borrow XX% of seems building deterioration. to

Chris Martin

one these today great issues is of like business. now operation okay towards market whole host the But industry variable of - specific is

Mark Fitzgibbon

be if then give a any then, it And I us could helpful. of lot just if provisioning into the maybe the because for guidance think about is know, lastly help could there rest year. would but you

Chris Martin

we with is which provisioning we XXX% particular that, dramatically ongoing of don’t rate, loans, Right that deterioration for than of additional where it’s comfortable an things loan. some that is basis given non those loans, there are accruing insurance of of see see the point Other highlighted pretty late on XX the we steady total so about reliability we required collateral now, levels. credit as we’re increasing that the may already goes, breaking nature this big are on this I review

Operator

comes question with Russell Davidson. next from The Gunther

Russell Gunther

If you how say billion around in proposed an $XX the comments perspective? the appreciate release keeping it expenses and quantify, regulatory I from obviously your eye if an potential that. to - benefit remarks, to as I prepared is for mentioned would you P&L on there goes you’ve guys

Chris Martin

- could vast those but risk certainly prescribed the but look longer certainly then stress no do individually testing not will standards. prudential First we in applicable enhanced and be at do, and we assessment we foremost our

that be counter hire would not Washington. have quantitative in additional helpful that staffing would analysis to So that to we

savings just be say reaffirmed that that that, think estimate to around I like million $X but. Tom we

Tom Lyons

for run to I was X million rate to X going overall million Durbin. was of have to million inclusive which $X even say $X.X to projecting a

Russell Gunther

mix loan of just Could color to perspective? of what heard in give to perhaps and first us to perspective. wanting volume rate side and expect I through ahead of team loud see from clear loan growth encouraging both things bit you pipe little you up would from terms and on on a geographic a just you pull run

Chris Martin

Well, and a predict. think from of it all there. residential a landing, business so many would There I mix that majority we’re lot not other little is institutions is it’s a factors, to loan to trying gather volume houses tougher

all pull-through XX% to XX% pull-through used We are those in at XX% put challenge best. have seeing facets. you to XX% loans a of opportunities is numbers deals been to these where lower term once our we these into some sheet, to the made The on down

they a lot for deals for are lot very others. competitive, aggressive of So that to trying we may levels don’t us, at people be think of a prudent be

community is certain any certain broker for trends projects, for period that will a are lightening we on to like. still with here of kind think we forwards time, multifamily don’t work as up and there select of there that, we use I don’t So the category

just we color. will think to - we Tom, trying what on I at at give and valuable those very do we all u look asset classes, that’s

Tom Lyons

growth some competition the disciple are some include and standards win to that's of peers our some of might be further lacking to to the in which also to the Probably of peers the appear rates. trying amongst credit we credit help

lot in we we’re rate of up short the favorable seeing of we buying, are been are rate bulk and Fortunately, currently. we variable so duration re-pricing, haven’t making going a assets,

Operator

comes The from KBW. next Gilbert with question Collyn

Collyn Gilbert

loan going the growth But great. messaging what’s side, I quarter, just on follow which a is you’re know kind given in of a little hearing surprise, saw up the of multifamily I the pickup. margin you CRE in on am so, that on this on Just guess, the the comment optimism mix

then to, what's the driving getting but of growth its that nature, is I like quarter, maybe very loan were would two still you’re thought have just curious the variable as those sounds And the book. interestingly one competitive. which two that segments So that be, would

the more bit a So segments could sort just driver those if try being to two little of growth? you color give of about us

Chris Martin

meet able of new Well with and industrial versus space from ones C&I to are to of going these without a commercial I people other I one more we real there couple path. still rate that is are thing are a the some few the - those certainly XX-year know order that to construction we the have In in issues. we quarter fact that can have that fixed our won’t down term in are are us. which we and fixed lot But client good ones estate a on get, missing in very established out customers trying first is at that new XX-year longer everybody well think we and the go aggressively out of which ones the space close

people did never price, under could maybe right one you say cut they only. that deal our at right but to think under I want the importance over-say the have somebody may we be time probably as we

Collyn Gilbert

the quarter, rose - just NPL then And the was loan when commercial that originated? credit that this

Chris Martin

It XXXX. you underwritten at wise to was that on - worst the effect. viable fine may put in the January books XXXX was current of end everything credit It business was right the of

Collyn Gilbert

- or she multiple have he have he projects? Does

Chris Martin

No.

Collyn Gilbert

the Is borrower project challenged it it that’s a challenged? is or that’s

Chris Martin

No, their it’s challenged that’s business. the borrower in

Collyn Gilbert

that side CD doing, release. then I think have extend kind you looking months thinking or funding that press the you said is mentioned been the on promotion think about on funding it Tom the in And split you want mix But the the to of XX you just on had I the you side the you - are balance are funding to how put to of sheet. you start all guys

Tom Lyons

book the just short, so I link. relatively guess rate to we’re to able funding the so wouldn’t our I manage say asset we’re on moderate extending because say we’re risk over is interest trying

Collyn Gilbert

quarter? this then fees And what were prepayment

Chris Martin

XXX,XXX quarter. Prepayment in the XXX,XXX versus fees trialing were

Collyn Gilbert

kind your year? I know it’s behaviors of where the of seeing the any think but to you’re hard predict the among just base level thoughts for could of you given activity borrower remainder

Chris Martin

more seeing got payoffs capital deployed are out lot to people find We be there aggressively. of as - some

ROE in some payoffs So get to still an always back first to firm. where insurance of a you company some we’re reduce we want And but save taking their coming getting lose possible, as you loans as level know to the saw that to and compete are debt reducing I don’t and construction to putting go. reasonable, with normally to their return or at kind see the don’t of well as any quarter I permanent we’re additional payoff borrowers seeing more can’t much the longer let debt. we fill try from we as in doesn’t we hurdle have the loans We it hit bucket way then activity they and our some think equity

Collyn Gilbert

you’re economy the think And NIM hikes. hikes - finally, then more positive you're better getting you’re NIM factored had expecting that said just outlook the on I indicated many you the rate offering? into Tom guidance margin you How

Tom Lyons

June We in have and margin September.

Operator

The Matthew from Piper Jaffray. next comes Breese with question

Matthew Breese

from a those I your differently to standpoint bit capture compare contrast Jersey only hoping And could is two address to geography little wanted your the may a to markets? and in Pennsylvania landscape differences you what competitive markets. spread North ability and maybe be

Chris Martin

there we capital, are team we XX there. Pennsylvania where would to points and was In require making there and when definitely enhancement more an we opportunities headway go basis

levels some compare make companies and they the to us. opportunities we two there trying some of assets Lehigh again hired Valley put at sense I I in that the the on market in to we’re don’t rationality are seeing if but a would have certainly players that get again smaller We new aggressiveness guess look.

area. is be of a There and can We’re on which our which growth more building sometimes. always lot scary encouraging done a the a on am We space want of little box getting PA spec is a warehouse something looks in I has good is to pretty that lot there of our maintain and late job. focus in our the where going team box just is to basis

has So market Jersey we the we versus Jersey known always think New PA opportunities well. New fairly

are about opportunities. our optimistic expansion Pennsylvania So we

We pull we the through see right will where can levels. at them

Matthew Breese

potential the the you preference of And one geography about do road other? you as think M&A a down have

Chris Martin

Yes, that I partnership institutions would work be great one with that of beneficial would but we’d institutions with. and the market and the is be ends - great to more ever at have that we the and other just that not doing conversations something we be preclude, there always to the good make a look we in love people, numbers Pennsylvania don’t to love they both and somebody share smaller are opportunity. as the customers bit have know the

that the way lending the versus officers. growth just probably novo by preferable de that’s would hiring So be couple just and/or a

So people we be and talking are are always of and if actively part there we is to going to it. opportunity listening

Matthew Breese

conversations in the flow level changes notable Any of conversations? the

Chris Martin

Nothing after reform and in kind materially our that brings. quarter everybody you’d of know down I what hunting seeing is expect tax to first

I is expecting available. the where premiums there were rationality I a to in longer a think people always come market think has huge in - that

Matthew Breese

you you’re towards and that then XXXX thoughts mentioned dollars initial potential any seasonal reads, or And item? putting impacts investments something on is

Chris Martin

potential No, reliable any point impact at early estimate. for I to really can’t any give you this us give too

Operator

question with from We have Gilbert KBW. up another Collyn follow

Collyn Gilbert

it not sellers curios or Matt sort if in covered interest whatever was it seeing and of you’re sounds no, but really? any on change just M&A like

Chris Martin

nothing is that to from that all to think have think hand quarter-to-quarter. just the changed on people able point have we are we conversations nothing I there No, it’s obviously I at other could

Operator

for concludes our the today's attending session conference. presentation. and concludes Thank you question-and-answer This

You may disconnect. now

Provident Financial Services (PFS) 27 Apr 182018 Q1 Earnings call transcript